Barney Frank has long been known for his quick wit and sharp tongue—and for being an out and proud gay member of Congress. But in recent months, in the midst of economic crisis, this liberal Democrat from Massachusetts has emerged as one of the more powerful barons in President Obama’s Washington. As chairman of the House Financial Services Committee—with oversight responsibilities for the crashing financial markets and the cratering banking industry—Frank is a key player in economic policy making and the government’s effort to prevent a depression.

As he prepared to manage legislation to impose federal limits on executive bonuses, Frank talked with Lloyd Grove about his recent dustup with Bill O’Reilly, the homophobia of Supreme Court Associate Justice Antonin Scalia, what it’s like to be lightning rod for the Republican right, and how he feels about disgraced Idaho Senator Larry Craig—who, 22 years ago, when the House Ethics Committee reprimanded Frank for his relationship with a male escort, was one of Frank’s chief tormenters.

Happy birthday.

It was yesterday. [Frank turned 69 on Tuesday.]

What did you do for your birthday?

Well my boyfriend [Jim Ready, who is 30 years younger than Frank] came down. He lives up in Maine and he flew down with me on Monday. He spent the day, sort of hanging out, then we used the gym, then went home, and had a nice quiet dinner at home.

"I particularly would’ve liked my mother to be around when Dick Cheney attacked me, because she would’ve
kvelled at the notion that I’m still haunting Dick Cheney."

OK, so you're about to manage this bill to restrict the compensation of executives in companies that receive TARP money.

Among other things, it undoes that great controversial piece of the appropriations bill [aka the stimulus package], the one that made things not retroactive. Now, the Republicans have a dilemma because they like having that to complain about. They’re unhappy about it not being there to complain about, and they said they’re opposed to the bill. [New York Rep.] Mike Arcuri asked a very smart question of Republicans who testified on the committee. He said, “I understand you’re opposed to what happened at AIG. I can understand people being opposed to what happened with AIG, I can understand people being opposed to the bill, but I don’t understand how you can be opposed to both—the bill undoes what happened with AIG.”

Of course the initial AIG bill—putting a punitive tax on bonuses—that passed overwhelmingly in the House is pretty much dead now. Do you think this one has any better chance? What you want to accomplish with it?

Two things. First of all, it repeals the piece that was put into the economic-recovery bill that said the [Chris] Dodd restrictions weren’t retroactive. Chris got a bad rap. He moved the ball on restrictions. The administration had said to him, "Don’t make it retroactive.' He figured, all right, something’s better than nothing, so he agreed to that. The provision that makes his stuff not retroactive became very controversial—though without him there wouldn’t have been anything in that not to be retroactive. The Republicans were making a big deal about that so I said, fine, let’s repeal it. Now they’re somewhat inconsistent, because they really don’t want to repeal it, they want to be able to complain about it. What the courts will say about the retroactive part remains to be seen, but at least it won’t be statutorially banned.

Secondly, it says if you get money under the TARP for capital infusion—only for capital, not if you participate in these other programs from lending to small businesses, etc.—you cannot make payments that are excessive or unreasonable according to standards promulgated by the financial regulators. And if you pay bonuses, they have to be performance-based. [Frank’s bill passed the House, but its fate in the Senate is uncertain.]

Does legislating as a response to populist rage make you uncomfortable at all?

If that’s all we were doing, it would. But this is a continuation of legislation that I began in September, when [Treasury Secretary Hank] Paulson came to us and said 'I want this money,' and we said you’ve got to have compensation restrictions. On the [AIG] tax bill, it depends on how you do it. This is a democracy. Why is it wrong? We’re damned if we do, damned if we don’t. Either we’re pandering or we’re being undemocratic. I think the quality of the response is what counts.

You’ve been chairman now for two years and two months. What’s that been like?

Well, I stress that, if you’re listening to the Republican critique, I was apparently the chairman without knowing it for 15 years because they complained about all these things that didn’t happen during the period they were in power, from 1995 to 2007.

You've been implicated by some opponents as being responsible for the failures of Fannie Mae and Freddie Mac.

When in fact they were in power and didn’t pass the bill. I became chairman on January 31, 2007. The committee passed the bill in March, and the House in May. I was very happy about it, particularly because one of my great passions has been affordable rental housing. One of my big fights with the Republicans was, they were killing the programs to build rental housing for people. They were the ones pushing them into homeownership. I was critical of that and said you’re not doing anyone a favor if you get them to buy a house they can’t afford and can’t keep.

Since you're a celebrity in Congress, people are interested in your life, and your opponents have claimed that [Frank’s ex-boyfriend] Herb Moses was working in a high position for Fannie.

How do you think it’s a high position? They’re lying.

What’s the truth of the matter?

Herb Moses was a man I lived with from 1987 until 1998. He went to business school and graduated from the Tuck School of Business at Dartmouth in 1990 at the age of 31. He got a kind of entry-level position in mortgages with Fannie Mae, wasn’t a high executive, wasn’t a president, a vice president, a senior assistant vice president. I doubt he was in the top 200 or 300 employees or even much more than that, and he worked there until 1998. We split up, he quit and left for California, long before I was the senior Democrat on the committee. I was like the fourth-senior Democrat. That’s an example of the lies.

What’s that like, being such a lightning rod?

What troubles me is not so much personally because people hear the facts and it’s OK. The problem is it’s a concerted effort by the right wing to avoid regulation. We’re in a terrible situation now because of the absence of financial regulation. The fundamentalists philosophically worry about regulations coming. They see this, I think correctly, as being like the New Deal, like Theodore Roosevelt and Woodrow Wilson, where the public sector steps in to put some rules in to govern the excesses of the private sector while still keeping the value of what they do. They’ve come up with an alternative explanation, because they want to avoid new regulations on hedge funds, on credit-default swaps, on collateralized debt obligations. They’re saying, you liberals help the poor people too much, you wouldn’t let Fannie Mae and Freddie Mac get regulated. And the argument now is, “Oh the Democrats stopped them.” I have to tell you, if I could stop them, there wouldn’t be an impeachment of Bill Clinton, the war in Iraq, the Terry Schiavo case, tax cuts for the very wealthy. But what troubles me is that it’s being used, for policy reasons, to prevent us from taking the kind of regulatory steps that we have to take.

You have a pretty thick skin obviously, but doesn’t that get to you that people are using you as a lightning rod?

Only if I thought it would be effective. I am fighting back because I don’t want it to have the effect of slowing things down, I don’t want us to get Swift-boated. There’s a liberal fallacy which is, if things are sufficiently and inherently implausible, they would be self-refuting, and John Kerry got Swift-boated, and this happened to other people.

What was the reaction after that amazing Bill O’Reilly encounter, which is a
YouTube favorite?

Mostly I heard from people who were sympathetic to me. I do think in that one he got somewhat damaged, and he did apologize for it a couple of times, in an article and elsewhere. Part of it was incredulity. “Why would you go on?” And I said, I think you don’t want to let these things go unrefuted. He’s not invited me back.

Ten years ago, I might have reacted more angrily, but I really am able to kind of separate it out. I’m being attacked not because of me personally but as an obstacle to regulate. I just did a fundraiser. I said, 'OK, they need to get some money, they’ve got to refute some of these things.' I’m being attacked by Ann Coulter, Rush Limbaugh, Karl Rove—none of these people I respect. Finally to top it off, I was one of the handful criticized by Dick Cheney in his post-vice presidential interview, and I said, my mother was wonderful woman, died three years ago at 92, and I have missed her constantly. But I particularly would’ve liked her to be around when Dick Cheney attacked me, because—I don’t know how good your Yiddish is— she would’ve kvelled at the notion that I’m still haunting Dick Cheney.

You earlier mentioned Chris Dodd, who has been going through this crucible over the whole AIG business. Are you worried about him? The Republicans think he’s low-hanging fruit at this point.

I don’t know enough, but I do think it’s unfair. They were in power. Democrats passed a bill in 1994, the last time we were in power, to tell the Federal Reserve to limit subprime lending, and Greenspan refused to do it. And in 2004, Bush was the one who decided to step up subprime lending. In 2003, I said I didn’t think Fannie and Freddie would go into crisis. I didn’t think Wachovia was in crisis or Merrill Lynch, and in 2004, Bush ordered Fannie and Freddie to significantly increase the number of loans they bought from people below the median. At that point, I joined [Ohio Republican] Mike Oxley in trying to regulate Fannie and Freddie. We passed a bill in 2005 out of the committee that I supported. I opposed it on the floor because they tried to screw up the affordable housing piece, but I still wanted to get the bill through, and I thought Oxley would help me get that piece out. He said Bush gave him the one-finger salute, and they killed the bill.

Why should members of the public believe that you and Dodd and committee chairmen in general get lots of contributions from people in businesses you oversee and yet—

Because they can look at my record and see that I have often opposed their interests. I put through the credit-card reform bill, over the objection of the people in that industry.

But your contributions have quadrupled—

When I became chairman. And it’s precisely at that point that I’ve taken more legislative action against them. Because in the minority I wasn’t able to get these things through. When I became chairman we would’ve passed the bill that would’ve restricted executive pay, that tightly regulated Fannie Mae and Freddie Mac, that restricted subprime lending and that restricted credit-card abuses.

Sounds like a huge disincentive to contribute to you.

No, because that’s not quite as crass as people think it is. They understand that Democrats in power are going to do things they don’t like. They want to be able to talk to us, but I defy anybody to show any correlation between how I vote and the contributions.

Yes, based on his opinions. Let me clarify this. It wasn’t based on his being opposed to gay marriage, because a lot of people can be. It was in the Colorado case when he dissented—

—and said it’s permissible to jail somebody for consensual sodomy.

Not only did Clarence Thomas put out an opinion that said the law was silly, Scalia basically said yeah, they should be in jail. He said, of course people have a right to disapprove of homosexuality, there are other areas people have a right to disapprove, like murder. He said the court, in ruling that you should not send two men to prison, criminally prosecute them for having sex in their own bedroom, that to say that was to take sides in the culture war on homosexuality. And obviously he took the other side. There’s no question Scalia thinks homosexuals are bad people and it’s a bad thing.

Are you planning to identify any other homophobes in public life?

Oh, it became relevant. People were asking me strategically what I thought, and I said I thought it was better that this [pursuing the constitutionality of gay marriage] was going to be delayed with Scalia still on the court. I have done so from time to time, when there were people acting out of what seems to me a bias, but only if it’s relevant to public policy. I’m not a commentator in general, and I do that when it becomes relevant to a strategic or tactical decision.

What do you make of Larry Craig, who was one of your chief tormentors two decades ago?

I feel sorry for him.

Do you think Tim Geithner has weathered the storm?

I think so. He’s got two very good plans out, I think he was unfairly criticized about a month into office. I thought the mortgage plan that he did was excellent, and I think the impaired-asset plan is a very good one, and I think he's doing the right thing on regulation, I think he’s clearly in good shape now.

How about the legacy of Alan Greenspan?

Oh, I think it’s a disaster. Well, I think two things. On macroeconomic policy, I think Alan was unfairly criticized. People said he should’ve deflated the bubble. What they meant was he should’ve caused high unemployment. Greenspan successfully resisted what even a lot of liberals said. It was this whole view, something called the NAIRU—the non-accelerating inflation rate of unemployment. That said, even the New York Times’ financial pages bought into it. If unemployment dropped below 5.5 percent, it would be inherently inflationary. Greenspan says, no look, we’ve got new productivity, that’s not the case. Unemployment got down to 3.9 percent without being inflationary, and Greenspan resisted a lot of liberals, and I give Alan credit because he said no—and he also acknowledged in hearings that we had too much inequality in the society. I also remember when a Republican asked him if he thought it was possible to cut taxes and increase revenue, and he said theoretically it’s possible but it’s never happened in my lifetime. He was, at the time, 80. But he made a terrible mistake in his opposition of regulation. In particular, his failure to use the power Congress gave him in 1994, to limit subprime lending, gives him heavy responsibility for this crisis. And Bernanke to his credit, used exactly the authority Greenspan refused to use to ban the wrong kind of subprime lending.

How is Washington different in the age of Obama?

The last two years was sort of the optimum personal fun, because we were the majority. I take it back—starting in September of last year, dealing with the financial crisis while doing other stuff, has been so all-consuming, I have no life outside of that, so I’m working harder than I would choose to work if it was up to me.

What about culturally? Do you see any difference at all? Or is it just the same old usual suspects?

No. I don’t’ see any. Obviously more Democrats are engaged in policymaking, so the tone of the public debate has changed...

Lloyd Grove is a contributing editor for Condé Nast Portfolio and a frequent contributor to New York magazine. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.